Plans by the Dutch government to raise real estate transfer taxes (RETT) from January 2021 are expected to lead to a deal rush before the end of the year, according to market experts.
The transfer tax on all residential property transactions whereby the asset is purchased for investment rather than occupation is set to rise from 2% to 8%, while the rate for all other commercial property assets is also set to go up, from 6% to 8%.
The hikes, unveiled as part of the government’s spending plans for 2021, are aimed partly at financing tax breaks on property purchases by first-time private buyers, for whom it is notoriously difficult to climb the property ladder.
Arnout Scholten, partner and co-head of the global real estate & construction practice area group of law firm CMS, predicts the increases, if implemented, will lead to more deals being completed by professional investors this year.
‘It will affect the timing and structuring of deals, so if, for example, you are considering a turnkey deal with completion following handover of construction, you might consider doing a forward-funding or forward commitment deal to lower your tax base,’ he said.
He added: ‘I think notaries will be very busy this year, we will see a lot of deals whereby transfer of ownership takes place this year.'
Scholten made the comments during PropertyEU's Investment in the Netherlands Roundtable event held in early September. He was one of a five-strong panel which also included experts from Savills Netherlands, Angelo Gordon, Edge and Panattoni. The full report on the event is available here.
The plans to hike the transfer tax have met with criticism from several quarters, including domestic housing associations which would also have to pay the higher rate when buying homes.
